China shoppers ring luxury tills from London to New York
By Adam Jourdan and Phil Wahba
SHANGHAI/NEW YORK (Reuters) - Fang Ying's December wish list of Louis Vuitton handbags and Chanel perfume is not only for Christmas. Fang, 33, a secretary working in Shanghai, writes one every month for friends and family travelling abroad.
Fang is not alone. Over two-thirds of luxury spending by mainland Chinese was made overseas in 2013, an increase from 2012, according to the China Luxury Market Study from consultancy firm Bain & Company released on Monday.
Chinese shoppers often wait for trips abroad, plan shopping sprees to Hong Kong or get friends or specialist "daigou" agencies to bring back luxury items from overseas because they are often cheaper due to China's high import taxes.
"Sometimes I'll go to a China store and look online for details about things I've liked, or try something on for size I've seen online. But when it comes to actually buying it I'll always get a friend to bring it back from abroad," said Fang.
China is the number one luxury spender worldwide, making up 29 percent of total global luxury spend this year, according to the Bain report. So Chinese consumers - wherever they may be - are a key battleground for firms from LVMH Moet Hennessy Louis Vuitton SA (LVMH.PA: Quote) and Gucci owner Kering Holland NV GUCG.PK to trench coat maker Burberry Group PLC (BRBY.L: Quote), cosmetics giant L'Oreal SA OREP.PA and Cartier watchmaker Compagnie Financiere Richemont SA CFR.VX.
"The store fronts are in Shanghai and Wuhan, but the cash registers are in Los Angeles, New York and London," said Sage Brennan, CEO of China Luxury Advisors, which helps brands in the Americas and Europe attract Chinese shoppers.
Chinese luxury spending slowed at home in the wake of a crackdown on corruption and shows of wealth, prompting warnings of a sales slowdown from liquor maker Pernod Ricard SA (PERP.PA: Quote) and Volkswagen-owned (VOWG_p.DE: Quote) Bentley Motors and Lamborghini.
Luxury brand store openings dropped significantly in 2013, according to Bain, which estimated China's luxury market will grow two percent this year versus seven percent a year earlier. Continued...